OpenAI’s investors are worried about a mass exodus of employees after Altman’s ouster, they told the news agency. Notably, more than 500 of the company’s 700 employees wrote to the board threatening to leave if Altman was not reinstated.
Read also | Sam Altman Confident about the Future of OpenAI with the Microsoft Partnership: “One team, one mission”
Legal Deliberations On
The sources told Reuters that investors are consulting with legal advisers to explore their available options. However, it remains uncertain whether any legal action against OpenAI will be pursued.
Most of the investors are worried that their significant investments in OpenAI may explode if the startup crumbles after Altman’s unceremonious exit. As a leader in its field, OpenAI is the “crown jewel” in many of these investors’ portfolios and the looming uncertainty makes them uncomfortable, the report noted.
OpenAI did not respond to questions, according to the report.
Also read: OpenAI’s Ilya Sutskever “deeply regrets” his role in Sam Altman’s ouster
OpenAI’s Company Structure
In terms of ownership, Microsoft has 49 percent in OpenAI’s for-profit arm, followed by employees and stakeholders who own another collective 49 percent, and the remaining 2 percent is with OpenAI’s nonprofit parent, according to the Reuters report citing data. from Semaphore.
OpenAI’s board fired Altman, citing a breakdown in communication, as detailed in an internal memo obtained by Reuters. Later, the majority of OpenAI’s workforce, numbering more than 700 employees, threatened to resign if the board was not replaced.
Due to OpenAI’s ownership structure, its control rests with the non-profit parent – this is unlike a typical venture capital (VC) backed company. The nonprofit holds humanitarian interests above the sole investor interest and thus it is employees and not investors who could hold the most sway on the board, legal experts told the agency.
Also read: OpenAI’s Sam Altman’s Oster brought AI security back into the Spotlight
Challenges in Legal Remedy
Legal experts also suggest that while nonprofit boards have duties, they also possess significant flexibility in making leadership decisions. OpenAI’s corporate structure, using a limited liability company as its operating entity, could further protect the non-profit’s directors from investor actions, narrowing the prospects for legal recourse.
Even if investors pursue legal action, experts warn that their case may be weak. Companies generally enjoy considerable discretion in making business decisions, even if those decisions yield adverse results. This flexibility was highlighted by the example of Apple’s dismissal of Steve Jobs in the past, only to rename him later.
Investors, despite their concerns and potential losses, could thus face an uphill battle seeking legal redress, given the unique governance structure and legal latitude enjoyed by OpenAI.
Watch: Open AI Gets Third CEO In Less Than A Week; Emmett Shear Replaces Mira Murati | Mint In Focus
Some Comfort in Sight?
Sam Altman, in a series of tweets, communicated a message of unity and commitment to the ongoing operations of OpenAI and its partnership with Microsoft. Amid significant leadership transitions, Altman’s tweets reflect an unwavering focus on the organization’s mission and its collaboration with the tech giant.
In one of the tweets, Altman underlined the common priority between himself and the CEO of Microsoft Satya Nadella to ensure the prosperous future of OpenAI.
Also read: Sam Altman fired from OpenAI to join Microsoft, Satya Nadella announces
“We are fully committed to providing continuity of operations to our partners and customers. The OpenAI/Microsoft partnership makes this very possible,” he wrote.
Altman’s tweets painted an optimistic picture of teamwork and common goals. The message of cohesion comes at a crucial time, as the company navigates through the restructuring of its leadership.
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Updated: 21 Nov 2023, 07:33 IST